A binary choice between outsourcing and overstretched in-house teams is no longer good enough, writes Norse Group Chief Executive Justin Galliford.

Public services need a more credible answer

There is a familiar lesson in public services: keep using the same model and it is optimistic to expect a different result.

The political landscape has shifted quickly, but the pressures facing councils, police forces and the NHS have not. Demand is rising, public expectations are high and budgets remain constrained. Dissatisfaction with the quality and reliability of local services helped carry Andy Burnham into Number 10. The harder question is what government now does about it.

Neither reorganisation nor insourcing is a silver bullet

Ministers see local government reorganisation as part of the answer: fewer, larger authorities, able to draw on scale, capacity and clearer lines of accountability. Others argue the priority should be to bring more services back under direct council control.

There is an obvious appeal to insourcing. If money currently leaving the system as profit were retained by councils or health bodies, the argument goes, residents would benefit. But the reality is less straightforward. After more than a decade of austerity, margins in many local government contracts have been squeezed hard. Carillion’s collapse showed the fragility of a market built on volume, thin margins and optimism. Contractors have cut aggressively to win work, while council procurement teams have become, rightly, much more exacting clients.

Taking a service back in-house does not, by itself, release a hidden pot of money. It also requires operational depth. Many authorities have lost experienced service managers and commercial specialists over many years. That capacity may be tested further as reorganisation absorbs senior leadership bandwidth and prompts departures among officers who have carried institutional knowledge through successive rounds of change.

The scale of the task should not be underestimated. Even a district or borough council is responsible for hundreds of statutory and discretionary functions. Adding significant delivery responsibility to organisations already stretched by demand, inspection, financial recovery and reform is not a minor operational adjustment. Some services should plainly remain close to the public sector. But few experienced council leaders would regard blanket insourcing as a risk-free strategy.

The case for pragmatic partnership

That is why the new prime minister’s emphasis on pragmatism is welcome. On issues such as homelessness and social care, the test should not be ideological purity but whether the right organisations are being brought together around clear outcomes. As mayor of Greater Manchester, Mr Burnham often framed public service reform around partnership and place. That instinct is the right one. No single organisation has all the assets, expertise or reach required to solve complex local problems.

Stronger local growth and better services are more likely when communities retain a stake in what is delivered, while specialist capability is still available where it is needed. That is not a theoretical proposition. It is the model our teams work through with councils across the country.

What a local authority trading company can offer

Norse Group is a local authority trading company, owned by Norfolk County Council. We are not a conventional private sector outsourcing business, nor are we an internal council department. We deliver services including highways, waste and facilities management, employ around 9,000 people, and operate with a public sector ethos. Growth generated through the model remains in the public sector, and tax is paid in the UK.

  • We employ experienced specialists focused on reliable service delivery.
  • We pay competitively because retention, skills and good employment practice matter.
  • We take on difficult work because we understand both operational delivery and the values of public service.
  • We invest in schemes such as training for ex-offenders because they can improve lives and reduce costs to the wider public purse.

A modest shift with significant value

The important point is accountability. Councils remain close to the services commissioned on behalf of residents, while drawing on an organisation built to deliver at scale. That offers a practical middle course between traditional outsourcing and asking already stretched councils to absorb every operational burden themselves.

Local government is entering another period of structural and financial change. If ministers are serious about doing things differently, they should look closely at the models already showing that public value, commercial discipline and local accountability can sit together.